factual

Does Aw need to provide notice to the franchisee before terminating the agreement for failing to comply with the agreement?

Aw Franchise · 2025 FDD

Answer from 2025 FDD Document

ded in Paragraphs 14.2 and 14.3, provided that if the sale to such purchaser is not completed within one-hundred twenty (120) days after delivery of such offer to us, or if there is a material change in the terms of the offer, we will again have the right of first refusal herein provided.

15. TERMINATION OF THE FRANCHISE.

  • 15.1 By the Company Without Opportunity to Cure. You will be deemed to be in default and we may, at our option, terminate this Agreement and all rights granted by this Agreement, without affording you an opportunity to cure the default, effective immediately upon delivery of notice of termination to you, if you (or any of your Owners):
  • (a) fail to locate and secure a suitable site, or to open your Papa Ray's Pizza Restaurant for business as provided in Paragraphs 4.1 and 4.6 or fail to satisfactorily complete the training program as provided in Paragraph 5.1;
  • (b) abandon, surrender, transfer control of, lose the right to occupy the Premises, or fail to actively operate your Papa Ray's Pizza Restaurant for two (2) or more consecutive days without our prior written consent;
  • (c) have made any material misrepresentation or omission in your application for the franchise rights conferred by this Agreement;
  • (d) are convicted of or plead no contest to a felony or engage in any dishonest or unethical conduct which may adversely affect the reputation of the Company, your Papa Ray's Pizza Restaurant, the System or the goodwill associated with the Marks;
  • (e) make an unauthorized assignment or transfer of this Agreement or your Papa Ray's Pizza Restaurant in violation of Section 14 herein;
  • (f) make any unauthorized use or disclosure of any Confidential Information, make any unauthorized use of the Marks or any other identifying characteristics of the System or otherwise impair the goodwill associated with these characteristics, or use, duplicate, or disclose any portion of the Operations Manual or other proprietary written materials;
  • (g) you (or any of your Owners) fail to comply with the covenants contained in Paragraph 9.2 and 9.3 of this Agreement,
  • (h) cause a threat or danger to public health or safety resulting from the construction, maintenance or operation of your Papa Ray's Pizza Restaurant and upon receipt of written or oral notice from us or governmental authority of the existence of such threat or danger, you fail to immediately cease any activity or conduct causing the threat or danger and fail to complete the cure of such breach within twenty-four (24) hours;
  • (i) fail on three (3) or more separate occasions within any twelve (12) consecutive month period to submit when due financial statements, reports or other data, information or supporting records, to pay when due the royalty fees, marketing fund contributions, other payments due to us or to pay amounts due to other persons, or otherwise fail to comply with this Agreement, or with any mandatory specification, standard or operating procedures we prescribe from time to time, whether or not such failures to comply are corrected after notice of those failures to comply is delivered to you; and

(j) fail on two (2) or more occasions during any calendar year to attend and complete any mandatory supplemental education or conference required by Paragraph 5.3 or Paragraph 5.4 of this Agreement.

This Agreement will expire automatically without notice upon the presentation for filing by you (or any of your Owners) of a petition or application seeking any type of relief under the Federal Bankruptcy Act or any state insolvency or similar law. (Upon presentation for filing of such a petition or application, the term of this Agreement will be deemed to be amended so that the expiration of this Agreement occurs at the moment said petition or application is presented to a court official for stamping and filing.) This Agreement will also terminate automatically without notice if someone files a petition or application seeking to have you (or any of your Owners) adjudicated a bankrupt or insolvent, or seeking other relief against you (or any of your Owners) under the Bankruptcy Act or any state insolvency or similar law and the petition or application is not dismissed within sixty (60) days after it is filed. In that event, the term of this Agreement will be deemed to be amended so that it expires on the 60th day after filing. You (and your Owners) expressly and knowingly waive any rights you may have under the provisions of the Federal Bankruptcy Rules, and consent to the termination or expiration of this Agreement, or any other relief which we may seek in a complaint to lift the provisions of any automatic stay under any bankruptcy rules. In addition, you (and your Owners) agree not to seek any injunctive relief from any court in any jurisdiction which would have the effect of staying or enjoining this provision.

  • 15.2 By the Company With Opportunity to Cure. We have the right to terminate this Agreement upon written notice to you if you (or any of your Owners):
  • (a) fail to accurately report the Gross Revenue of your Papa Ray's Pizza Restaurant or to timely pay royalty fees, marketing fund contributions, or other payments due to us or our affiliates, and do not correct such failure within ten (10) days after written notice of such failure is delivered to you;
  • (b) commit any act or omission of default under the lease for the Premises and do not cure the default within the applicable cure period set forth in the lease;

Source: Item 22 — CONTRACTS (FDD pages 39–40)

What This Means (2025 FDD)

According to Aw's 2025 Franchise Disclosure Document, Aw can terminate the franchise agreement with or without an opportunity for the franchisee to cure the default, depending on the nature of the default.

Aw may terminate the agreement without giving the franchisee an opportunity to cure if the franchisee fails to secure a suitable site, abandons the business, makes a material misrepresentation, is convicted of a felony, makes an unauthorized transfer of the agreement, misuses confidential information, fails to comply with specific covenants, or causes a threat to public health and safety. In these instances, termination is effective immediately upon delivery of the termination notice.

However, Aw is required to provide written notice and an opportunity to cure for other breaches of the agreement. For instance, if a franchisee fails to accurately report gross revenue or pay fees, they have ten days to correct the failure after receiving written notice. If the franchisee defaults on their lease, they have the cure period specified in the lease. For failing to meet minimum gross revenue, the franchisee has a twelve-month period after notice to improve. For other general failures to comply with the agreement, the franchisee typically has 30 days to correct the issue after written notice. If the breach cannot be reasonably cured within 30 days, the franchisee is given a reasonable amount of time to complete the cure as long as they commence a bona fide program to cure the breach within 30 days and continue to take necessary actions to complete the cure.

Additionally, the agreement will expire automatically without notice if the franchisee files for bankruptcy or insolvency, or if such a petition is filed against them and not dismissed within 60 days.

Disclaimer: This information is extracted from the 2025 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.